When was the last time your company or business ran a competitive analysis? Do you know who your competitors are? 

It is very important for businesses to conduct a competitive analysis and knowhow to create an effective one. Competitors in business exist every day and for businesses willing to succeed in the market, competitive analysis is crucial.

Competitive analysis can help you learn the ins and outs of how your competition works, and identify potential opportunities where you can out-perform them.

It also enables you to stay atop of industry trends and ensure your product is consistently meeting and exceeding industry standards, according to different online business blogs.

Mariam Ishimwe, a business owner in the cosmetic industry, says that a competitive analysis also helps the growth of the business brand.

"Doing a competitive analysis offers you an opportunity to spot where innovation is needed, to learn about how to promote your business more and to also to enhance your services or business, there are many competitors that are selling the same products like yours or offering the same services, to outshine them you will need to have a strong competitive analysis strategy,” she says.

How often to conduct a competitive analysis

Eugene Kamali, a project manager, says that there should be no rule of when or how often to conduct a competitive analysis, for companies and businesses should always be ahead of their competitors.

"If a business decides to sit down and wait to conduct a competitive analysis after like two years, the business is risking a lot in terms of product and brand promotion. Businesses and companies should protect their place in the market so it is very important to always have recent, effective and accurate data about their competitors,” he says.

He also adds that businesses and companies should stick to their strategies and avoid reacting immediately when their competitors are going all over the place, it is best to analyse deeply and study them because if rushed, it can also bring out bad results.

According to business daily, a competitive analysis, also known as a competitor analysis, is a way of evaluating how well your business and its products or services are performing compared to other companies selling similar products or services in your market.

 A competitive analysis also helps you:

 Identify your strengths and weaknesses.

 Understand the marketplace you operate in.

 Evaluate trends in your sector.

 Plan future growth.

How to conduct and create a competitive analysis

According to Josh Rovner, business consultant and bestselling author of Unbreak the System: Diagnosing and Curing the Ten Critical Flaws in Your Company, these are 9 steps for completing a competitive analysis:

1. Identify the products or services you want to evaluate.

For most analyses, they will be the products or services that generate the highest revenues or demonstrate the most significant potential for growth.

 2. Seek direct competitors.

These companies compete for roughly the same market with comparable products or services. For example, accountants competing against other accountants.

3. Pinpoint indirect competitors.

These companies target the same market but with different products or services. For example, accountants competing against bookkeepers.

4. Examine replacement competitors.

These companies offer a different product or service but address the same issue as your products or services (for example, apps that assist entrepreneurs).

5. Determine which parts of your competitors’ businesses are worth investigating.

These aspects could be pricing, distribution and delivery strategies, market share, new products or services coming to market, who their long-standing, highest-spending customers are, the quality of after-sales support, and which sales and marketing channels they use.

6. Research all identified competitors.

You may only find minimal accounting and operational records for most competitors, especially non-public companies. Other useful information – like target customers, product features, type of staff employed, and price points – will be easier to find.

7. Document your research in a written analysis.

Make sure your document is substantive and actionable, but not so long that your staff won’t read it. Comparison charts and graphs are useful to help you and your team visualise your position in the market in relation to your competitors.

8. Identify areas to improve and execute the changes.

Could you improve the quality of your products or services by adding or amending a feature, lowering the price to be more affordable, or improving after-sales support? 

 9. Track your results.

Measure your sales with a profit and loss statement to determine if the changes were successful.